Labour looks set to crack down on anonymous donations to political parties as it seeks to win more political support for its controversial changes to the election spending law.

But National appears unlikely to drop its opposition to the measure as the Government digs its heels in over making January 1 the date from which political advertising is regulated in an election year.

Labour's flagship "pledge card" looks likely to become the first casualty in the election spending row, as a fresh war of words erupts between National and Labour after talks over tightening up the rules for the use of taxpayer funds collapsed for a lack of consensus.

Parliament looks likely this week to roll over validating legislation passed after an auditor-general's report last year, which found that political parties misspent $1.2 million on political advertising in the three months before the 2005 election. Labour's $440,000 pledge card, which has been a feature of election campaigns since 1999, was the biggest item.

National claims that the validating legislation makes the use of taxpayer funding on Labour's pledge card lawful, and MP Gerry Brownlee accused Labour yesterday of planning to railroad through the law change to "legitimise its ... pledge card rort".

But Miss Clark indicated yesterday that Labour was unlikely to fund the pledge card through the parliamentary leaders fund, if at all. "I think you can count on the Labour Party erring on the side of caution," she said.

The auditor-general's criticism of party political spending prompted a two-pronged response from the Government - the validating legislation, and the Electoral Finance Bill aimed at clamping down on third-party advertising and regulating the period in which parties can buy advertising in an election year.

The bill has been criticised by National as draconian, and Labour has also been criticised for its failure to clamp down on anonymous donations and secret trusts. However, Labour is understood to have had a change of heart and could move on both once the bill is reported back to Parliament.